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Entrepreneurship Development Institute of India

Ahmedabad, Gujarat
___________________________________________________________________




(For restricted circulation and comments. Not to be quoted.)

Draft National Entrepreneurship Policy

PREFACE

Entrepreneurs shape economic destiny of nations by creating wealth and employment,
offering products and services, and generating taxes for governments. That is why
entrepreneurship has closely been linked to economic growth in the literature on the
subject. Entrepreneurs convert ideas into economic opportunities through innovations which
are considered to be major source of competitiveness in an increasingly globalising world
economy. Therefore, most governments in the world strive to augment supply of competent
and globally competitive entrepreneurs in their respective countries. While developed
nations have a reasonably good pace of entrepreneurial supply, most developing countries
suffer from dearth of such entrepreneurs. This is one of the reasons for the poverty in
developing countries, despite their rich resource endowments.
India has been growing at a relatively high rate in the last few years, and is likely to be the
largest economy in the world by 2050. Unlike most of the developed economies, India is a
young country with about 63 per cent population currently being in the working age group of
15 to 59 years. This is a plus factor in its favour as studies have found that nascent
entrepreneurship prevalence rates are highest in the 25-34 age group. But, this
demographic dividend could prove to be its albatross if we are not able to engage our youth
in creative pursuits through developing appropriate skills, including entrepreneurship skills.
As of now, only about 5-6 per cent youth have access to some kind of skills.
The Indian society, by and large, has a distinct preference for service/decent job, that
provides economic security and access to power that be. Youth get exposure to this kind of
pro-service culture since childhood. They grow up with a job-oriented mind-set, and seldom
think of entrepreneurship as a career. Our educational system also rarely exposes the
students to entrepreneurship; prepares them for a job instead. Even if someone with a high
entrepreneurial aptitude wants to set up a business, she/he is discouraged by a host of
adverse factors: lack of adequate access to information on setting up and operating a
business, procedural hurdles, lack of start-up funds, lack of adequate networks and
mentoring support, difficult access to technology, lack of a supportive system, operational
difficulties, and the nightmare about the consequences of failure. These factors loom large
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and hinder the emergence of entrepreneurship, in adequate measure. In view of these
considerations, the Government of India has decided to formulate a National
Entrepreneurship Policy with the overarching aim to augment the supply of entrepreneurs.
The proposed Entrepreneurship Policy, it needs to be clarified, is different from Micro, Small
and Medium Enterprise (MSME) Development Policy. While MSME policy focuses on
existing enterprises or a group of enterprises (clusters), entrepreneurship policy focuses on
individuals with an expectation that they would move towards entrepreneurship. The client
in the case of an MSME Policy is a firm, a physical entity, unlike the entrepreneurship policy
where it is difficult to pin point the target precisely. The Entrepreneurship Policy
encompasses multiple stages in the emergence of an enterprise from pre-start to
stabilisation and growth. It usually focuses on motivation, opportunity and skills with the
primary objective of encouraging people to venture out. Moreover, while an MSME Policy
uses hard policy instruments to directly benefit established firms; entrepreneurship policy
uses soft policy measures such as awareness, promotion, skill development, networking
and mentoring, and tries to change the mind-set of target group. In short, it aims at making
entrepreneurship a movement.
A clarification on the target of the proposed policy is also warranted. For, the strategic
paradigm of promoting entrepreneurship may shift, depending upon how one defines the
target. It is often argued that while every entrepreneur is self-employed, every self-
employed person is not an entrepreneur. By and large, Entrepreneurship Policies across
the globe do not regard self-employment as entrepreneurship. Rather, entrepreneurship
has some element of innovation and growth potential. Entrepreneurs bring productivity
gains through innovations and enhance competitiveness. Entrepreneurship Policy strives to
promote and strengthen the requisite competence to this end.
While the above paradigm has merit and will be given due consideration, entrepreneurship
policy in a developing country like India, suffering from serious unemployment problem, can
hardly ignore self-employed segment of the economy. Not only do these necessity based
entrepreneurs eke out their living as an integral part of unorganised/informal sector, they
also contribute significantly to GDP and employment. It is estimated that the non-farm
unorganised sector accounts for about 89 per cent of the gross value added and almost 98
per cent of employment in MSMEs, of which over 64 per cent units fall in the self-
employment category. Government is aware of the fact that due to their informal status,
they do not have much access to the Government support umbrella. It is, therefore,
necessary to craft an Entrepreneurship Policy which is all inclusive and addresses concerns
of self-employed micro entrepreneurs as well as under-represented groups like women,
minority communities, SC/ST, other disadvantaged groups.
In view of these considerations, the proposed Policy, though focussing primarily on
innovative, nascent, start-up and growth-oriented entrepreneurs, will also address the
issues confronting self-employed micro entrepreneurs and under-represented groups with a
view to making them more productive, efficient and competitive.
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Part A
1.0 POLICY STATEMENT: BROAD FEATURES
1.1 Most of the studies on the role of entrepreneurship in economic growth suggest that
there is a strong relationship between the level of entrepreneurial activities in a
region or a country and its rate of economic growth (Carree and Thurik, 1998 and
2002).
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The Global Entrepreneurship Monitor (GEM) in its report of 2002 also
showed that the national level of entrepreneurial activity has a statistically significant
association with subsequent level of economic growth. GEM data also suggests that
there is no country that has high levels of entrepreneurship and low levels of
economic growth (Reynolds et al., 2002, p. 24).
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In the Indian context also, a study
found a similar trend. On the basis of a cross section of data for 17 major states of
the country, the study found a positive impact of the Index of Entrepreneurship on
per capita income. The regression results indicate that a unit change in the value of
the Index of Entrepreneurship will bring Rs. 185.40 change in per capita income.
Using a double log function, the study also found that one per cent change in the
value of the level of entrepreneurial activity will lead to 0.05 per cent change in per
capita income. More interestingly, the study also revealed that average per capita
SDP of the states with Index of Entrepreneurship above median is on an average
higher by Rs. 6096 compared to the states with lower value of the Index.
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1.2 The role of entrepreneurship is not confined only to creation of enterprises, but also
includes creation of the capacity to produce wealth, jobs and income, which are the
most direct indicators of economic development. In fact, underdevelopment is not
because of the lack of natural resources but because of the absence or inadequate
supply of entrepreneurs. If only natural resources were the key determinant of
economic growth, the entire African continent or Latin America or most of Asia would
have been developed. Within India, states like Assam, Bihar, Madhya Pradesh,
Orissa, etc., would have been leading the growth trajectory of the country. As a

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Carree, M., and A. Roy Thurik (1998). Small Firms and Economic Growth in Europe. Atlantic Economic
Journal 26 (2): 137146.And, Carree, M., and A. Roy Thurik (2002), The Impact of Entrepreneurship on
Economic Growth, in Zoltan Acs and David B. Audretsch (2003), International Handbook of
Entrepreneurship Research, Boston/Dordrecht: Kluwer Academic Publishers. A number of studies relating to
OECD countries reveal a positive relationship between business start-up rates between 1988 and 1996 and
economic growth between 1989 and 1999. Kantis, Hugo, Masahiko Ishida and Masahiko Komori (2002).
Entrepreneurship in Emerging Economies: The Creation and Development of New Firms in Latin America
and East Asia. Washington, DC: Inter-American Development Bank.

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Reynolds, Paul D., William D. Bygrave, Erkko Autio, Larry W. Cox and Michael Hay (2002). Global
Entrepreneurship Monitor 2002 Executive Report.


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Awasthi, Dinesh, Kashyap, SP and Yagnik, J (2006), Entrepreneurial Manifestations: Present Trend and
Changing Landscape in an Inter-regional Context, Unpublished Report, New Delhi, Government of India,
Ministry of Micro, Small and Medium Enterprises.
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matter of fact, economic growth is the outcome of entrepreneurial endeavours. They
pool together and organise various factors of production. They explore opportunities,
convert ideas into viable business propositions leading to provision of new products
and services to society. They change the way we live.
1.3 While there always is an autonomous supply of entrepreneurs in all parts of the
world, in the developing countries it falls short of the quantity that is necessary to
adequately exploit resources to generate wealth and employment. There are also
issues pertaining to the quality of entrepreneurs. The quality of whatever little
autonomous supply of entrepreneurs these developing countries have is also rather
suspect. This is amply reflected in the high (close to 40%) industrial sickness in
these countries, including India.
1.4 India needs opportunity-driven competent entrepreneurs, who set up sustainable
enterprises, create employment, and generate wealth, whereas most entrepreneurs
in developing countries are necessity driven forced entrepreneurs. They enter into
the realm of business as they have no option to earn their livelihood from any other
source. As a result, whenever the economy does well, the size of self-employed
category invariably shrinks, as these self-employed pseudo entrepreneurs move to
jobs that provide financial security and decent earning, which, as self-employed, they
will seldom earn. The question is; where will this supply of opportunity driven
entrepreneurs come from? How will potential entrepreneurs acquire competence and
global competitive edge?
1.5 Added to this are the burning issues of unemployment and poverty that continue to
pose serious challenges to polity and economy of the nation. From where will jobs
come if we do not have adequate number of job providers, i.e. entrepreneurs? The
role of Government as a job providing sector is likely to diminish over a period of
time. Agriculture has limited capacity to provide gainful employment to the teeming
millions. Even if we think of diversification in the agricultural sector, farmers will
require a different mind-set. They will have to look at agriculture as a business rather
than a traditional occupation and merely a source of livelihood. With the advent of
WTO, even the agriculture sector will have to be reoriented, revamped, and made
entrepreneurial to take advantage of a liberalised world market. Service sector has
been emerging as a major source of employment creation. But it also needs
entrepreneurs, the drivers of growth.
1.6 The need of the hour, therefore, is to augment the supply of well-groomed
opportunity and innovation driven entrepreneurs, rather than factor or necessity
driven self-employed. We must create job providers in larger numbers rather than job
seekers. It will help redress the twin problems viz. unemployment and poverty.
1.7 This requires concerted efforts. Youth should start looking at entrepreneurship as a
lucrative career. The Government realises that there is a need to catch them young.
This requires inculcating entrepreneurial values and skills in them at a young age.
This may also require introducing entrepreneurship in the education system. There is
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also a need to inculcate entrepreneurial temper in society at large to make all walks
of life entrepreneurial, to make India an entrepreneurial nation wherein
entrepreneurship becomes a way of thinking, a way of life.
1.8 Though, several initiatives are in place to promote entrepreneurship in the country,
the efforts are disjointed. There is a plethora of policies such as Micro, Small and
Medium Enterprise Policy, Manufacturing Policy, Competition Policy, Industrial
policy, Science and Technology Policy, National Design Policy, etc., that touch upon
and have implications for entrepreneurship, directly and indirectly. But the focus on
entrepreneurship remains fragmented and devoid of any strategy content. It is
argued that there must be a mechanism in place that leads to a high rate of inflow of
new entrepreneurs who in turn create new enterprises. The questions being raised
are of the quality and quantity of entrepreneurs who could take advantage of the
emerging opportunities in the wake of liberalization and globalization of the
economies. India unfortunately is deficient on both counts. Across the world,
business processes have undergone a sea change in the post liberalisation era. It
would be difficult to meet the level of competition with traditional family owned
business processes. There is a need to modernise businesses so that they become
globally competitive. Entrepreneurship needs to be made a revolution. Therefore, the
Government has decided to refocus on promotion of entrepreneurship in the country,
in a strategic manner, through a comprehensive National Entrepreneurship Policy.
1.9 Vision:
The vision is: To place India in the comity of front ranking entrepreneurial and
innovative nations.
1.10 Mission:
The mission of the entrepreneurship policy is; To create an eco-system in India
wherein opportunity based and innovative entrepreneurship germinates, sustains
and grows leading to creation of a more dynamic and entrepreneurial economy.
1.11 Objectives of the Entrepreneurship Policy: The overall objective of the National
Entrepreneurship Policy is to create conducive conditions that augment continuous
flow and emergence of opportunity driven entrepreneurs. The specific objectives of
the Policy are to:
i. trigger an entrepreneurial culture and inculcate entrepreneurial values in society
at large and influence the mind-set of people towards entrepreneurship;
ii. create awareness about the charms of being an entrepreneur and the process of
entrepreneurship, especially among youth;
iii. encourage more dynamic start-ups by motivating educated youth, scientists and
technologists to consider entrepreneurship as a lucrative, preferred and viable
career;
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iv. support early phase of entrepreneurship development including the pre-start-up,
nascent as well as early post start-up phase and growth enterprises;
v. broaden the base of entrepreneurial supply by meeting specific needs of under-
represented target groups like women, minorities, socially and economically
backward communities, scheduled castes and scheduled tribes and under-
represented regions to achieve inclusive, balanced and sustainable growth of
entrepreneurship in the country;
vi. facilitate creation of social enterprises to address the needs of the population at
the bottom of the pyramid;
vii. ensure adequate availability and flow of information to potential entrepreneurs,
eliminate entry and exit barriers, create a business friendly, non-threatening and
conducive regulatory and policy environment to reduce administrative burden
related to compliances of various kinds; and
viii. create an eco-system by evolving an institutional framework and organisational
structure to achieve the above objectives.

1.12 To achieve the above stated objectives, the Government will follow a multi-pronged
strategy:

(i) Sensitising, Promoting and Igniting Entrepreneurship
(ii) Creating and Fostering Entrepreneurship
(iii) Nurturing Entrepreneurship
(iv) Recognising and Celebrating Entrepreneurship
(v) Institutionalising the Entrepreneurship Movement

1.13 Based on these broad strategies, specific policy instruments have been
conceptualised to achieve the stated goals and the overarching Vision of the
Government to place India in the comity of front ranking entrepreneurial and
innovative nations. These instruments which are outlined in greater detail in Part B
of the Policy document broadly cover the following areas:
(i) Promoting entrepreneurship through electronic and print media;
(ii) Introducing entrepreneurship in the education system at all levels to orient
and prepare students for an entrepreneurship career by imparting skills,
knowledge and aptitude for entrepreneurship;
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(iii) Placing special focus on introduction of entrepreneurship as a core subject in
engineering colleges and other technical institutions to promote technology
based enterprises through promoting Incubators; and, creating a system to
encourage scientists to commercialise R&D without hampering their IPRs;
and bringing industry-academia closer to augment the process of
commercialisation of scientific discoveries.
(iv) Promoting inclusive entrepreneurship by bringing women, minority
communities, scheduled caste and scheduled tribes and other under-
privileged groups within the ambit of the Policy so that they get their fair share
in the Government efforts to promote entrepreneurship. Provisioning business
development services and business counselling for these target groups will be
ensured, given its importance in promoting and nurturing entrepreneurship;
(v) Fostering Social Entrepreneurship;
(vi) Promoting an eco-system for accelerating entrepreneurship, enhancing the
flow of information on procedures and formalities to set up an enterprise by
strengthening the one-stop-shop i.e. single-window system; and, ensuring
ease of entry and exit;
(vii) Enhancing access to finance for start-ups, growth enterprises, tech-
enterprises and micro entrepreneurs.
(viii) Recognising entrepreneurial achievements and organising Awards, setting
up Young Entrepreneurs Consortium, etc.
(ix) Creating an organisational structure for advocacy and coordination to promote
an Entrepreneurship Movement.
1.14 Through these strategies, an attempt will be made to reduce barriers to entry into
entrepreneurship and hasten the pace of entrepreneurial supply. This would mean
increased rate of formation of new enterprises which are the major source of
innovation, employment and wealth creation. Government realises that such an
endeavour could hardly be achieved without strong participation of diverse
stakeholders: public sector, private sector, educationists, scientists, bankers,
captains of industry, non-government organisations, etc., with the Government,
being a key stakeholder, as the coordinator. The Government role, however, would
be that of a facilitator, a catalyst and a regulator rather than a controller.
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Part B

2.0 SENSITISING, PROMOTING AND IGNITING ENTREPRENEURSHIP

2.1 A study on Entry Barriers to Entrepreneurship
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brought to the fore that one of the
major entry barriers to entrepreneurship was disapproval of the family followed by
lack of awareness about entrepreneurship and a general belief that it involves a
great deal of risk. A business, with uncertainty and insecurity discourages majority of
youths from nurturing the ambition of an entrepreneurial career. Because of
compulsions and social pressures, they do not wish to risk social security and hence,
prefer salaried jobs. Moreover, entrepreneurship is not considered as respectable a
career as bureaucracy or other professions like medical, engineering, management
all of which enjoy a better social status, thanks to a biased mind-set. Therefore, the
first barrier the policy addresses to remove is the negative mind-set towards
entrepreneurship by raising the profile of entrepreneurs in society. In this respect,
exposure to role models is likely to have a significant demonstration effect, as their
recognition itself is likely to increase social legitimacy of entrepreneurship. It is a
common knowledge that, societies that value self-sufficiency, individualism and
autonomy; and respect people who accumulate wealth are more predisposed to
entrepreneurship. Induced interventions aimed at increasing awareness of
entrepreneurship as a lucrative and attractive career for youth, in society, are called
for.
2.2 Attempt will be made to impart due status to entrepreneurship in society.
i. Academic Institutions will be encouraged to develop case-studies on local
successful entrepreneurs and use them in the classrooms. They will also be
encouraged to publish these stories in local Newspapers.
ii. The National Book Trust will be involved in preparing inspiring case-studies on
nationally impact making, successful entrepreneurs, and publish them for wider
dissemination;
iii. Authors, who are involved in developing childrens literature, will be engaged in
developing story-line and pictorial biographical series (like Amar Chitra Katha)
focussing on overall entrepreneurship theme and real life stories of successful
entrepreneurs. Through such literature children will be exposed to
Entrepreneurship Heroes, who may become their role models;


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Shukla, Sunil and Awasthi, Dinesh (2001), Study on Entry Barriers to Entrepreneurship, (Unpublished Report), New
Delhi, Government of India, Ministry of Micro, Small and Medium Enterprises

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iv. TV Channels for children like Cartoon Network, POGO, Disney, Nickelodeon,
Hungama, etc., will be encouraged to show movies and games focussing on
innovation, creativity and entrepreneurship.
v. Social media has emerged as a very powerful tool of communication among
youth. Ways will be explored to use this new age medium to promote
entrepreneurship among youth and help them network with likeminded people;
vi. Radio has a wide reach even in rural areas, particularly the FM Radio which is
very popular among youth. To begin with, a 30 minute slot twice a week will be
allotted for promotion of entrepreneurship, which will subsequently be raised to
a daily programme;
vii. Media attention to entrepreneurial phenomenon has been observed to be a
feature of countries with high rates of entrepreneurial activity. Government will
make judicious use of print and electronic media to create mass awareness to
raise the profile of entrepreneurship by focussing on charms of being an
entrepreneur.
viii. The impact of television on society could hardly be overstated. Various TV
Channels (particularly Business Channels) will be encouraged to host talk
shows, entrepreneurship quiz, discussion forums, interactions with young
achiever-entrepreneurs, business simulation competition, serials, etc., to
facilitate development of entrepreneurial orientation among youth. Besides, the
support of Doordarshan, the Government television channel which has the
largest coverage, will be sought to promote entrepreneurship by organising
similar activities in regional languages;
ix. In addition, entrepreneurship will be promoted through a number of auxiliary
activities like organising My Story Sessions in schools by successful
entrepreneurs; celebrating Entrepreneurship Week by organising workshops,
seminars, debates, essay writing, idea competition, business plan competition,
industry visits, etc.

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3.0 FOSTERING ENTREPRENEURSHIP THROUGH EDUCATION
3.1 The role of education in shaping the mind-set and thought process of youth can
hardly be overstressed. The purpose of exposing the students to entrepreneurship is
to motivate them to look at entrepreneurship as a viable, lucrative and preferred
career. Two of the key entry barriers to an entrepreneurial career facing students
are, according to the Study on Entry Barriers to Entrepreneurship referred to earlier,
lack of self-confidence; and, disapproval by main decision-maker in family. Main
reasons behind their lack of confidence in choosing an entrepreneurial career are
lack of knowledge about business opportunities; ignorance about procedures and
formalities in starting and managing a business; and, hesitation in taking risk.
However, even though a large number of respondents (about 81%) for this study had
no immediate plans to enter an entrepreneurial career, a majority of them (58%) was
willing to reconsider their career choice in favour of entrepreneurship, provided
adequate counselling and guidance on the process of setting up a business and
related regulations, procedures and formalities were made available. But the
National Policy on Education (1986) does not mention entrepreneurship even
obliquely.
3.2 Creating a critical level of growth oriented innovative entrepreneurs depends upon
the quality of education and the eco-system that promotes innovation. While
education provides the base for innovation and creates a value system; an
entrepreneurial culture drives wealth creation and gives further push to innovations.
This necessitates proactive policy interventions in favour of entrepreneurship.
However, the National Policy on Education (1986) does not mention
entrepreneurship even obliquely. To encourage the students to opt for
entrepreneurship as a career, the Government will introduce entrepreneurship in the
education system at all levels and orient and prepare students for an
entrepreneurship career by imparting skills, knowledge and aptitude necessary for
successful entrepreneurship journey.
3.3 Entrepreneurship Education at Primary School Level
3.3.1 The exposure that children get at their impressionistic age, is engrained in their
minds permanently. At this stage, their exposure to entrepreneurship has to be soft
pedalled.
i. At pre-primary stage, children will be made aware of a few leading entrepreneurs
through their pictures and brief pictorial depiction of their innovations and
achievements.
ii. Primary school students will be exposed to activity based learning models on
entrepreneurship such as flatoun Programme geared towards inculcating
entrepreneurial values and skills among children. (This Programme developed in
Mumbai (India), is being replicated in over 80 countries). A few interesting
business games will also be introduced at this stage.
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iii. will facilitate holding large number of short duration Camps on Entrepreneurship
during summer and winter vacations camps, to expose children to creativity,
innovation, excellence and achievement.
iv. Capacity of primary school teachers will be developed to handle entrepreneurship
related teaching and activities.
v. The Government will coordinate with and encourage state Governments to
introduce such innovations in primary education.
3.4 Entrepreneurship Education at Secondary and Vocational School Level
3.4.1 Having experienced a flavour of entrepreneurship in primary schools, the students
will be exposed to entrepreneurship more intensively at later levels in their
educational career. The students now will be oriented towards hard-core
entrepreneurship, through teaching and experiential learning.
i. Short term Entrepreneurship Awareness Programmes and Entrepreneurship
Orientation Programmes will be organised periodically in secondary and
vocational schools, to expose the students to the concept of entrepreneurship
and the emerging opportunities in the field.
ii. There are a few internationally acclaimed activity based models like Junior
Achievement Programme (running in over 100 countries since the last 45 years
or so), geared towards inculcating entrepreneurial values and skills among
students. Effort will be made to adapt such models to Indian situation for
replication at a large scale in the formal school education, in order to provide the
students with the opportunity for experiential learning and getting first hand feel of
entrepreneurial behaviour.
iii. Entrepreneurship will be made a compulsory subject at the secondary level in all
the schools.
iv. A curriculum will be specially designed for secondary level and vocational stream
students. Inputs on entrepreneurial process will be imparted to them so that those
who do not intend to pursue higher studies may start their ventures immediately
after passing out. The Government of Gujarat has already introduced such a
course in vocational stream with the help of Entrepreneurship Development
Institute of India. The experiment will be leveraged and replicated in other states
as well.
v. Implementing such a strategy also calls for teachers trained in teaching
entrepreneurship. Therefore, in the short run, Government will support schools to
get their teachers trained in imparting entrepreneurship related inputs by
Entrepreneurship Development Organisations. In the long run, Government will
introduce Entrepreneurship as a compulsory subject in Teachers Training
Colleges.
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vi. Government will also support development of teaching material, cases and text
books, videos, etc., for Secondary School students.
vii. Schools will also be encouraged to facilitate formation of Entrepreneurship
Clubs, organised and managed by students who could undertake
entrepreneurship centric extracurricular activities like quiz, debate, business plan
competition, idea competition, lecture series, factory visit, etc.
3.5 Promoting Entrepreneurship in Higher Education
3.5.1 Most students make career choices, while pursuing their higher education.
Therefore, this is the right stage when they should be oriented towards
entrepreneurship as a preferred choice. But the study on entry barriers, referred to
earlier has pointed out, the students in the sample were alien to the idea of
entrepreneurship and its process, and hence did not consider entrepreneurship as a
career choice. A majority of them, however, also opined that if they were exposed to
opportunities, procedures and formalities, they would be willing to consider their
career in entrepreneurship.
3.5.2 However, the present status of entrepreneurship teaching in higher education in
India leaves much to be desired. The University Grants Commission (UGC)
developed a curriculum for under-graduate level, way back in 2000 and circulated it
to all the universities and colleges for their consideration. Subsequently, a minuscule
number of colleges have started basic entrepreneurship teaching. All India Council
for Technical Education (AICTE) has been promoting Entrepreneurship Development
Cells (EDCs) in engineering and technology colleges. On a rough reckoning, there
are about 50 EDCs supported by AICTE. The Ministry of MSME also supports, in a
limited manner, creation of EDCs in Universities. It had supported about 5
universities in setting up EDCs. National Science and Technology Entrepreneurship
Development Board of the Department of Science and Technology is the major
sponsor of EDCs, though its focus is engineering and science colleges and
universities. So far, it has sponsored close to 80 EDCs. Besides, a number of
Management Schools have been offering entrepreneurship as one of the electives.
Only 4-5 Business Schools offer post graduate programme in entrepreneurship.
3.5.3 Given the number of students, the entrepreneurship infrastructure in educational
institutions is quite inadequate. For example, of the 620 universities and over 33,000
colleges, only about 200 have Entrepreneurship Development Cells. And, not all
cells are very active. Therefore, Government realises that it needs to give a big push
to mainstream entrepreneurship in education system.
3.5.4 To make entrepreneurship an integral part of Higher Education (specifically Arts,
Commerce and Management Faculties), the Government will:
(i) make it mandatory for all the universities and colleges to introduce
entrepreneurship as a 90-hour course (30 hours each year) at under-graduate
level, in all the faculties, by 2015.
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(ii) develop a 90-hour curriculum for teaching entrepreneurship, which will assign
significant weightage to applied; field based components rather than only
theoretical, class room teaching. New assessment parameters will be evolved
for evaluating performance of students. Each Arts and Commerce student will
be expected to have identified a viable business opportunity and prepared a
sound, bankable business plan, at the end of the course.
(iii) encourage Universities and colleges to treat entrepreneurship as a separate
discipline of study and launch a 3-year undergraduate (Bachelor of
Entrepreneurship B. Ent.), 2-year post-graduate (Masters in Entrepreneurship
M. Ent.), and a Ph.D. programme in entrepreneurship, on the lines of
Bachelor of Business Administration (BBA) and Masters of Business
Administration (MBA), by 2020.
(iv) encourage youths who drop out at various levels, to take up an entrepreneurial
career. For such students, the Government will encourage Open Learning
Programmes in Entrepreneurship. Government will help Indira Gandhi National
Open University (IGNOU) and Entrepreneurship Development Institute of India
(EDI) who are already offering such distance education programmes in
entrepreneurship, to up-scale their efforts and outreach.
(v) in grading/accrediting institutions of higher education give higher weightage for
promoting entrepreneurship among students and teachers.
(vi) ensure that the University Grants Commission allocates higher grants and
funding support to institutions that successfully motivate and support students
who choose entrepreneurship as a career and set up their ventures.
(vii) encourage teachers in helping students set up their ventures and extend
support in managing their enterprises in the initial phase. They will be allowed
to invest and also take sweat-equity in the venture, on mutually agreed terms
and conditions.
(viii) make it mandatory for universities and colleges to set up Entrepreneurship
Development Cells (EDCs) with a view to providing hand-holding support and
thus facilitate setting up of new ventures by the students. The Cells will also
organise short-duration training programmes on venture start up for persons
other than students, as a part of their outreach activities.
(ix) expect EDCs to operate as a one-stop-shop for all necessary information on
formalities and procedures involved in setting up a venture and will also
authorise EDCs to complete necessary formalities and procedures on behalf of
the Government departments so that student-entrepreneurs do not have to run
approach multiple agencies for completing formalities.
(x) provide space to student-entrepreneurs on the university/college campus to
help them showcase and sell their products for the first two years of their
operations.
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(xi) encourage Institutions to maintain a roster of students who become successful
entrepreneurs.
(xii) encourage universities and colleges to promote student-driven
Entrepreneurship Clubs which will organise various activities focussing on
entrepreneurship, such as: discourses and debates, quiz/essay, case/idea
competitions, lectures by successful entrepreneurs, organising
Entrepreneurship Week, networking with local entrepreneurs, business
associations, financial institutions, technology providers and R&D institutions,
organising small business clinics for helping micro-entrepreneurs in the
neighbourhood, focussing on women entrepreneurship, promoting the concept
of social entrepreneurship, networking with other entrepreneurship clubs, etc.
3.6 Fostering Innovation Driven Entrepreneurship through Incubation
3.6.1 Incubators are the seed bed for high impact innovations leading to new start-ups and
growth ventures. The incubatee companies are in fact large companies which only
started small. Besides, new knowledge-based ventures are emerging as a new tool
of social equalisation. Incubators provide a complete eco-system for formation of
such innovative ventures.
3.6.2 Incubators lead to creation of jobs, wealth, revenue for government, deployment of
new technologies and creation of new knowledge. With the advent of knowledge
driven economy, incubators are no more an option but a necessity to ensure growth
and competitiveness of a country.
3.6.3 Technology Business Incubators (TBIs) have emerged as the major source of
innovation across the globe. They provide infrastructure; counselling; technical
advice; access to information, access to venture capital, mentoring and networking
and overall support in start-up process under one roof. This is a kind of one-stop-
shop for innovators.
3.6.4 Resources being committed by the governments all over the world underscore the
significance of TBIs. There are over 1300 Incubators in USA and Canada, 900 in
Europe, over 800 in China, about 300 in South Korea, 200 in Japan, and 100 in a
small country like Taiwan. In contrast, India has only about 115 TBIs. Of these 115,
National Science and Technology Entrepreneurship Development Board (NSTEDB)
of the Department of Science and Technology (DST), Government of India, has set
up about 70 incubators, while the remaining 40-45 incubators have been set up by
other public and private agencies including the Ministry of Micro, Small and Medium
Enterprises (MSME) and Department of Information Technology.
3.6.4 Over and above, there are a number of R&D Labs under the Department of Scientific
and Industrial Research (DSIR). The DSIR also promotes incubation based
entrepreneurship through its Technopreneur Promotion Programme (TePP).
3.6.5 As mentioned earlier, there are over 10,500 engineering colleges and polytechnics in
the country with an intake capacity of about 22,00,000 students. These institutions
15

are the potential hubs of innovation. Every year close to 20,00,000 projects, based
on new ideas, are submitted by the students for evaluation. It will be reasonable to
assume that at least one out of 100 projects will have some commercial value.
Further filtering of ideas might bring down the number by half, to a reasonable
10,000. It means a modest target of one innovation one college a year in each of the
10,000 odd engineering colleges. It is quite achievable.
3.6.6 In order to promote technology based entrepreneurship, the National Science and
Technology Entrepreneurship Development Board (NSTEDB), set up in 1982, has
been quite active by sponsoring Entrepreneurship Development Cells,
Entrepreneurship Awareness Programmes, Idea Competitions, Business Plan
Competitions and, above all, by setting up Technology Business Incubators in
reputed technology and management institutions.
3.6.7 Despite the given pool of science and technology teachers in the universities,
scientists, researchers and students with background of science and technology,
new technology venture ideas have not become widespread, due to lack of
appropriate strategic interventions. Government must realise the need to augment
support infrastructure to take advantage of the available scientific and technology
based intellectual capital which has the potential to be commercialised, and can take
the country into a new orbit of global competitiveness. To achieve this goal, the
Government will:
(i) hasten the pace of setting up of TBIs in good and reputed engineering colleges
and universities, based on their National Assessment and Accreditation Council
(NAAC) Rating which have a track record of promoting entrepreneurship.
Government will facilitate setting up of at least 200 new incubators in the next 5
years. It will also encourage setting up incubators beyond metro centres, in tier-
2 and tier-3 towns.
(ii) provide innovators with access to Government supported testing facilities,
including those available in institutes of higher learning like IITs/IISc, at a
subsidised rate. This is against the backdrop that innovators do not have
enough resources to create testing facilities for their products (such as solar
energy, pharmaceuticals, etc.). The Government will also equip a few high
performing specialised TBIs in creating such facilities in their focus area.
(iii) encourage setting up of incubators jointly by engineering colleges and business
schools to harness the strengths of both types of institutions in promoting hi-
tech, high growth entrepreneurs. It is often stressed that the professionals who
operate TBIs do not have adequate competence in business development
processes, like finance or marketing. They are not able to offer the much
needed business counselling and commercial guidance and advice to
incubatees. The incubator managers also lack proper networking with business
community and angle investors. At the same time, a large number of fairly good
business schools exist without their business development expertise being
16

utilised. Government will also welcome industry associations to join such
ventures as co-promoters.
(iv) extend support to all the engineering colleges and polytechnics in setting up
Entrepreneurship Development Cells (EDCs) with the ultimate aim of upgrading
some of the high performing EDCs into TBIs.
(v) encourage better interface between industry and academia (including university
system and research labs) to take advantage of each other and undertake joint
research which could be jointly patented. Such partnerships bring financial and
intellectual capital at one platform, leading to enhanced pace of
commercialisation of research.
(vi) bring in adequate flexibility to universities and faculty to patent publically funded
research by enacting a law akin to Bayh Dole Act of USA that has been quite
effective in promoting university led R&D innovations. Even within the country, a
few IITs (like IIT, Kanpur) have been successful in this. Government will
encourage replication of such innovative models for promoting and
strengthening IPRs.
(vii) ensure that technologies developed by publically funded institutions and
national laboratories are necessarily put in public domain for commercialisation
so that it is accessible to people who need such technologies.
(viii) recognise high performing TBIs by declaring them as Centres of Innovation
Excellence and intensify financial/resource support for their expansion and
growth. The practice of Fund them For the First Five years and Forget them
Forever (6 Fs) will be altered in favour of merit-based long-term support.
(ix) encourage the development of incubator variants such as Cross Cultural
Venture Incubators, NRI Tech Convergence Incubators, Accelerators, World
Scale Venture Incubators, etc., over a period of time.
(x) introduce a scheme entitled Adopt a Start-up to attract successful
entrepreneurs to provide handholding support to start-ups for a year, from a
Technology Business Incubator.
3.6.8 The Government is aware of the utter lack of funding support for start-ups. This issue
is being addressed in a separate section of the document.
3.6.9 The Government is convinced about the contribution of Technology Business
Incubator (TBI) Programmes in Indias growth strategy. It is also aware of the need
of an exclusive Incubator and Innovation Policy and is committed to introduce one.
However, since TBIs play an important role in promoting high-tech start-ups and
technology driven growth entrepreneurship, a few policies that strategically affect
emergence and growth of innovation driven tech-enterprises have been integrated in
this National Entrepreneurship Policy.
17

4.0 FOSTERING INCLUSIVE ENTREPRENEURSHIP

4.1 The base of entrepreneurial supply has historically been rather narrow, confined by
and large to a few castes and communities, leaving out a large section of society
consisting particularly of women, scheduled castes & scheduled tribes, minorities,
artisans, etc., under-represented. Similarly, the supply has also been regionally
imbalanced, leaving a large part of Eastern and North Eastern India under-
represented.
4.2 The ownership data from the 4
th
Census of Micro, Small and Medium Enterprises
(MSMEs) conducted by the Office of the Development Commissioner-MSMEs,
Government of India clearly shows that despite almost 50 per cent share in
population, women account for only 7.36 per cent of the ownership of MSMEs.
Similarly, about only 11 per cent enterprises are owned by SC/ST and only 17.14 per
cent by minorities (including Muslims, Sikhs, Christians, Jains and Buddhists).
Similarly, eight North Eastern states account for only 3.48 per cent share in the
micro, small and medium enterprises, according to the 4
th
Census of MSMEs,
Government of India. Moreover, the ownership, irrespective of the segment, is
confined to micro enterprises. Government realises that under-development of these
communities and regions is primarily because of the uneven development of
entrepreneurship that has led to their entrepreneurial alienation and
disempowerment.
4.3 There are a large number of employees and retired or voluntarily retired civil
servants and army personnel who would like to start their own ventures. However,
very limited facilities are available for such potential entrepreneurs. As a result,
substantial opportunities are lost because of lack of appropriate mechanism to
support such potential.
4.4 Realising that economic empowerment is a necessary condition for, and a major
route to social and political empowerment, the Government will attempt to promote
inclusive growth of entrepreneurship, encompassing all sections and regions of
society to exploit emerging opportunities and thus achieve equitable entrepreneurial
growth in the country. To achieve the goal of inclusive entrepreneurship
development, the Government will address the reasons behind under-representation
in entrepreneurial manifestations of these segments. These would include providing
access to information, credit, market linkages and managerial competencies, as a
comprehensive package. Of course, the focus here will be on promotion of micro
enterprises of self-employment variety, rather than high profile enterprise creators of
classical kind.
4.5 While the present efforts of various ministries of the central and state Governments
are notable, they leave much to be desired. For example, Union Ministries of MSME,
Rural Development, Housing and Urban Poverty Alleviation, Food Processing
Industries, Justice and Social Empowerment, Department of Science and
18

Technology and Ministry of Textiles are engaged directly or indirectly in the
promotion of entrepreneurship, addressing mainly under-represented sections of
society and regions. However, there is plenty of scope to multiply such efforts. For
example, there is hardly any reservation for SC/ST in Entrepreneurship Development
Programmes, barring a few conducted for particular segments like women or SC/ST.
So far, the focus on minorities is virtually non-existent. To improve the situation, the
Government will:
(i) Suitably review the current entrepreneurship development strategy (which is,
by and large, micro enterprises/self-employment focussed) of the Ministries
and ensure that these under-represented segments and regions are
adequately integrated in the approach by laying special focus on them.
(ii) Map-out the areas of concentration of SC/ST and minorities and make special
efforts to promote entrepreneurship among women and youth, in sectors in
which they have some competitive advantage like skills, raw material base,
etc. For example, primary value addition (initial processing) will be encouraged
at source to help local small farmers and producer groups enhance their
incomes.
(iii) Undertake a mass campaign to promote entrepreneurship/self-employment
among these segments by enlisting support of opinion leaders of such
communities to encourage youth to look up to entrepreneurship and self-
employment rather than seek employment.
(iv) Promote the concept of Exopreneurship wherein employees take an exit route
to become entrepreneurs with the support of companies they had been
working with, emulating Corporates like Ingersoll Rand that support such
individuals by enrolling them as their vendors or suppliers of goods and
services.
(v) Encourage Rs. 100 crore plus companies to regularly organise
entrepreneurship awareness and orientation camps to encourage their
employees to set up their own ventures as their vendors or suppliers.
(vi) Promote target specific micro enterprise development programmes for youth to
build their capacities in terms of knowledge, skills and aptitude so that they are
able to negotiate with the market forces successfully.
(vii) Involve national and state agencies engaged in helping disadvantaged and
marginalised groups of population to improve their lot agencies such as
National Scheduled Caste Finance and Development Corporation (NSCFDC),
National Minorities Development and Finance Corporation (NMDFC), National
Backward Classes Finance and Development Corporation (NBCFDC),
National SC & ST Finance and Development Corporation, National
Safaikarmacharis Finance and Development Corporation (NSFDC), National
Handicapped Finance and Development Corporation (NHFDC), Rashtriya
19

Mahila Kosh (RMK), State Women Economic Development Corporations
(WEDCs), etc., in proactively promoting entrepreneurship among their target
communities.
(viii) Promote Group Entrepreneurship, so that these micro entrepreneurs, as
producer groups, in rural, tribal and underrepresented areas are able to reap
economies of scale. Micro entrepreneurs, in these areas are too weak to face
the onslaught of market forces individually.
(ix) Focus, initially, on tier-2 and tier-3 towns to promote entrepreneurship, while
initiating similar activities in selected smaller towns and rural areas.
(x) Encourage training, consultancy and counselling agencies to extend business
development services at affordable prices to untrained entrepreneurs in the
informal sector to help them improve their performance. A large number of
persons start their enterprises, especially in the informal sector, without any
planning, as that is the only livelihood opportunity available to them. More often
than not, such entrepreneurs barely eke out their living and continue to
languish at the subsistence level. They seldom survive the vagaries of the
market, primarily because of the lack of appropriate entrepreneurial skills and
competencies.
(xi) Encourage, successful local entrepreneurs by empanelling them as Mentors
to provide start up mentoring and business counselling support to nascent
entrepreneurs.
(xii) Initiate necessary steps to ensure MSME participation in procurement of goods
and services by the Government, public sector companies and defence
organisations. Realising that MSMEs face major problems in marketing their
products, the Government has recently announced a policy for public
procurement from MSMEs to the extent of 20 per cent of their requirements.
The organised retail-chains, likely to emerge soon in the country, too may be
encouraged to procure supplies from MSMEs provided the supply-capabilities,
especially of artisans and micro entrepreneurs, at individual and group level
are improved. The Government will reach out to private sector in developing
suppliers capabilities in these areas, in a PPP Mode.
(xiii) Encourage private sector to integrate with the micro and small enterprises by
providing knowledge, management and linkages to these enterprises as a part
of its Corporate Social Responsibility (CSR).
(xiv) Build capacity of small producers in the areas of technology, quality, skills and
managerial capabilities.
(xv) Encourage small producers, especially from under-represented groups and
regions to organise themselves into cooperatives, collective enterprises,
producers companies, group entrepreneurship, etc., so that they are able to
20

supply goods and services of uniform quality and in bulk, and within time, and
at a reduced logistic cost to reap economies of scale. In this context, primary
focus will be on clusters of products that are primarily produced by SC/ST,
minorities, socially and economically backward communities and backward
regions.
(xvi) Make an effort to bring in convergence of about 20 public schemes of
assistance to micro and small enterprises, being presently implemented by
various ministries and parastatal agencies.
(xvii) Encourage entrepreneurship development institutes to offer capacity building
programmes for strengthening family businesses and inculcating
entrepreneurial competencies among the new generation youth. It is well
established that clusters of micro and small enterprises are seedbeds of
innovations. They thrive on social capital that develops over time. It is also a
fact that most Indian enterprises are family businesses and not necessarily
well managed. Most enterprises are imitative and prone to decay, due to lack
of proper capacity building efforts, succession and growth plans. Programmes
in capacity building stir their creative and innovative instincts among the target
groups.
(xviii) Focus on new enterprise creation in clusters by organising product/sector
specific Entrepreneurship Development Programmes (EDPs). Such
programmes are likely to yield better results in terms of start-ups as a sound
eco-system already exists in clusters of SMEs.
(xix) Give a stronger push to Entrepreneurship-cum-Skill Development Programmes
currently organised under the aegis of the Union Ministry of MSME, with a
focus on underrepresented groups and regions.
21

5.0 PROMOTING SOCIAL ENTREPRENEURSHIP AND SOCIAL INNOVATIONS TO
ADDRESS BOTTOM OF THE PYRAMID
5.1 Given the level of poverty, unemployment and deprivation among the poor, the
governments all over the world are concerned with devising alternative means to
improve the situation. In this context social enterprise has emerged as an important
organisation form in empowering poor and addressing their needs. Social innovation
is the other side of the coin of social entrepreneurship. Economic mainstreaming of
poor calls for higher levels of creativity and social innovations to foster sustainable
growth, secure jobs and facilitate, financial inclusion, etc. Social innovation seeks
new answers to social problems by offering new products and services to integrate
the poor with markets as active participants rather than passive recipients.
5.2 Social Entrepreneurship offers market-based solutions to social problems. It also
challenges the market status quo by introducing new variety of organizational
structures. However, unlike a commercial enterprise, social benefit is fundamental to
a social enterprise. It not only creates social value but also creates economic value.
Traditionally, people think of not-for-profits agencies as being responsible for
creating social value and profits oriented organisations for creating economic value.
Social entrepreneurship brings these dichotomies together, marrying social interest
and market mechanisms to create both social and economic value under the ambit of
a new type of institution. The hallmark of social entrepreneurship is its ability to
combine social interests with business practices to effect social change. A number of
social enterprises are contributing a great deal to the welfare of the poor. Examples
of such enterprises are Grameen Bank of Bangladesh, Jaipur Foot, Aravind Eye
Care, Jaipur Rugs, etc. Looking at the contribution of such social enterprises to
society, the Government will:
(i) actively promote social entrepreneurship in the country. Government will
encourage universities and institutions to launch a course on Social
Entrepreneurship as a part of Bachelor of Social Work (BSW) and Master of
Social Work (MSW). Similarly, management schools will also be encouraged to
offer a course on social entrepreneurship. EDIs will be encouraged and
supported to develop short duration Social Entrepreneurship Development
Programmes (SEDPs) to hone capabilities and creative skills of those who are
interested in starting social enterprises.
(ii) assist training institutions of repute to organise short-duration awareness-cum-
orientation programmes on social entrepreneurship for support system officials
so that they are able to extend requisite assistance to social entrepreneurs in
22

their survival and growth. Social Entrepreneurship is a nascent concept, which
the officials may not be aware of.
(iii) foster a social capital market place by offering fiscal incentives to attract
investors and make provision for funding support under a separate scheme to
facilitate access of social entrepreneurs to credit. Since the objective of a social
enterprise is not to make profits permanently but to ensure affordability and
availability of products and services to the poor and also accessibility of poor to
products and services, which are out of their reach (be it health services,
education, potable water, housing, electricity, or even nutrition) it takes a while
for a social enterprise to break-even during which period it requires infusion of
capital that may not give immediate returns.
(iv) encourage NGOs to convert their organisation into a social enterprise or set up
a new one to become sustainable and provide useful services to the poor and
help them attain empowerment.
(vi) set up Social Innovation Incubators and facilitate their linkage with R&D
organisations, management schools, public and private sector enterprises and
corporates to hasten the pace of creative solutions to unsolved social problems.
(vii) help demystify innovations and provide social enterprises an access to relevant
technologies developed by publicly funded R&D labs.
(viii) include social clauses in procurement procedures in Government, public sector
and defence organisations to involve social entrepreneurs in provision of goods
and services for the poor.
(ix) set up a Social Innovation Fund to promote social innovations and support
experimentation in social entrepreneurship at national and regional levels.
23

6.0 EASE OF ENTRY AND EXIT AND CREATING A FACILITATIVE ENVIRON-MENT
FOR EMERGENCE AND GROWTH OF ENTREPRENEURS
6.1 A business friendly environment and easy entry and exit encourage potential
entrepreneurs to take firm steps towards setting up their enterprises. However,
presently, there are quite a few roadblocks that deter youth from taking steps
towards entrepreneurship. In a recent survey entitled Doing Business in a more
Transparent World published by The World Bank and IFC, for the year 2012, India
ranks 132
nd
in terms of ease of doing business and 166
th
in terms of starting a
business among 183 countries surveyed. Despite reforms and governments efforts
towards liberalising the economy, it takes 29 days to start a business compared to
one day in New Zealand, three days in Singapore and Rwanda, nine days in Mexico
and 19 days in South Africa. In India, it takes 1420 days to enforce a contract which
has 46 procedures. Indias rank on this parameter is 182
nd
out of 183; and, it takes
seven years to resolve solvency with barely 20 per cent recovery rate. An
entrepreneur spends almost 254 hours per year in paying taxes. Registering a
property takes almost 44 days. This scenario is uninviting indeed.
6.2 Transaction costs of starting and operating a business are high and the process is
also complex in India. A number of registrations like Tax Account Number (TAN),
Permanent Account Number (PAN), Value Added Tax (VAT), Employees Provident
Fund (EPF), Employees State Insurance (ESI), Excise Department, etc. have to be
obtained to start a venture. Completing these formalities and procedures involve a lot
of time and efforts. Similarly, property registration also takes long time and stamp
duty and transfer charges differ from state to state. Moreover, an entrepreneur also
has to obtain a number of clearances and permits from the central and state
governments, like; a no objection certificate from Pollution Control Board, land use
permits, power, water and sewerage connections, etc.
6.3 Government is aware of the fact that all this implies heavy transaction costs in terms
of time and money. This is in spite of the fact that in most states, Single Window
System is in vogue. Under this system, technically an entrepreneur has to submit
his/her application at a designated nodal point and all the permits and licenses are
taken care of. However, in actual practice it works as what has come to be known as,
i.e., Single Window, Multi Door facility, because the power to grant approvals is
vested with various regulatory and support departments. Only a few states, i.e.
Chhattisgarh, Gujarat, Rajasthan and Odisha have come up with new legislations
under which, empowered bodies have been created to address all the procedures
and formalities at one point. The decision of such bodies is all-pervasive.
6.4 It will be the endeavour of the Government to remove these constraints and come up
with business friendly rules and regulations to facilitate entry of young potential
entrepreneurs into business. However, since the MSMEs fall under the jurisdiction of
state governments, Government of India will work closely with the state governments
to improve the support system to create an entrepreneur-friendly environment, by
carrying out necessary reforms.
6.5 It will be the endeavour of Government to promote an eco-system enveloping all the
key stakeholders viz. government, industry associations, NGOs, academic/training
24

institutions/banks and financial institutions, support agencies, regulatory bodies, etc.,
to help entrepreneurs realize their dream of creating a successful innovative and
growth venture.
6.6 The government will make a serious bid to reduce the time of starting a business
from the present 29 days to about two weeks. To achieve this goal, the Government
will:
(i) introduce Single Unique Enterprise Identity Number (SUEIN) that a new
enterprise could use for various registrations including taxes and social
security like, EPF and ESI. Once SUEIN is available, the information could be
forwarded to all the relevant regulatory and support agencies, which in turn
use it to facilitate the process of setting up the enterprise.
(ii) encourage states to introduce a Single Composite Application Form (SCAF)
that will help entrepreneurs file a single application for obtaining all the
approvals and clearances from various government authorities. Some states
have already introduced the SCAF; other state governments will be
encouraged to follow suit.
(iii) encourage state governments to strengthen their Single Window System on
the lines of the states like Andhra Pradesh, Chhattisgarh, Odisha, Rajasthan,
under which a High Power Committee is constituted to give all the necessary
clearances for setting up a business. The SCAF system will also be
implemented under these empowered committees.
(iv) provide on-line access to application forms and other relevant information on
availability of land, water and power connection, tariffs, incentive policy, rules,
regulations and procedures, etc., to potential entrepreneurs.
(v) convert the present District Industries Centres (DICs) into Business
Development Centres (BDCs) with an objective to provide technical and
procedural handholding support and counselling to pre-start-up, nascent,
early start up and growth ventures. These BDCs will be governed by an
independent Governing Board with successful entrepreneurs in the majority
(At least 1/3
rd
members will be successful entrepreneurs, including successful
women entrepreneurs, below the age of 30 years). A successful local
entrepreneur will be its Chairperson.
(vi) assess the feasibility of setting up special Fast Track Commercial Courts
(FTCCs) to settle commercial disputes and cases related to enforcement of
contracts and solvency/bankruptcy, within a stipulated, reasonable time-
frame. The government will also encourage state governments in setting up
FTCCs.
(vii) permit flexibility to start-ups in hiring and retaining workforce for operational
adjustments and rationalisation during the first three years of operation of an
enterprise, assuming that by the end of three years it will either stabilise and
grow or become sick and close down.
(viii) allow easy exit to enterprises if they have been in operation for less than three
years. Such enterprises will be facilitated to close their operations, if not found
viable, within a period of three months.
25

7.0 ELIMINATING INFORMATION DEFICIT

7.1 The study on Entry Barriers to Entrepreneurship, referred to earlier, indicates that
one of the key entry barriers to entrepreneurship is the lack of adequate information
on procedures and formalities of starting a business. A nascent entrepreneur
requires updated and reliable information on various facets of setting up and
operating a business, such as registration process, regulatory aspects, statutory
compliances, sources and procedures for obtaining finance, availability and access
to infrastructural facilities, market intelligence and international markets, sources of
technology, government policy for procurement of goods and services, etc. Though,
Ministry of MSME, Federation of Indian Chambers of Commerce and Industries (with
support of the Department of Science & Technology) and State Governments
provide information on procedures and formalities, it is scattered and fragmented.
There is no single website that provides a comprehensive set of information to a
potential entrepreneur. Most of the time, the available information is out-of-date and
thus not relevant (especially in the cases of states). Acknowledging the information
deficit facing nascent entrepreneurs, the Government will:
(i) set up a One-Stop-Shop that will provide optimal information services to start
ups and existing entrepreneurs., (on the lines of One Stop Capital Shops in
the USA, Direct Access Government Online Resource in the UK and
EnterpriseOne in Singapore) to facilitate easy access of entrepreneurs to
online information at the click of the mouse. It will be housed in the Ministry
of MSME till a better alternative is found. Other relevant ministries like the
Ministry of Commerce, Ministry of Rural Development, Department of Science
and Technology, etc. will be encouraged to join hands in this endeavour.
(ii) create an all-encompassing website on Entrepreneurship as a one point
information kiosk on commercial information which will include market related
information on prospects and trends, international business environment and
cautions wherever necessary, information on doing business with a particular
country, new emerging technologies and their sources, information on
technologies that have potential of commercialisation and are available with
public funded research organisations, etc.
(iii) bring out periodically updated Entrepreneur Information Handbooks
containing guidelines on all the procedures and formalities of setting up and
operating a business and accessing support infrastructure, in Hindi and
English as well as in regional languages. This source will be made available in
both hard as well as soft form.
26

8.0 IMPROVING ACCESS TO FINANCE
8.1. Finance for new enterprises continues to remain Achilles Heel of the entire process.
As per the 4
th
Census of MSMEs, conducted by the Office of the Development
Commissioner (MSMEs), Government of India, for the year 2006-07, 92.77 per cent
of MSMEs did not or could not access institutional finance, and were self-financed.
Only 5.18 per cent MSMEs accessed finance from institutional sources. Similarly,
RBI data also shows that the share of small scale industries in the gross bank credit
from scheduled commercial banks has been continuously going down. In 1990-91,
the share of SSI was 15.42 per cent of the gross bank credit. The corresponding
figures for the year 2006-07 were merely 6.34 per cent. This is despite the fact that a
number of committees set up by the Reserve Bank of India have recommended the
ways to increase credit flow to micro and small enterprises.
8.2 The situation about the availability of start-up funds is still worse. While limited seed
funding is available under the TePP scheme of the Department of Science and
Technology for establishing proof of technology based innovations, the financing for
the next stages of product development and market development is quite limited. In
fact, information asymmetry, as stated in the Report of the Committee on
Technology Innovation and Venture Capital (2006) set up by the Planning
Commission, makes it difficult to raise finances at the early stages because ventures
often have a low equity base and lack cash flow to sustain debt finance. Financial
Institutions, being risk averse, also usually do not finance such ventures. Angel
Investors, more often than not, come to the rescue of such ventures. But, in India,
even the angel investors shy away from such investments and operate more as
Venture Capitalists. There is a need to create a window for start-up funds.
8.3 There is also a paucity of accelerator/growth funds and venture capital for growth.
There are also gaps in private equity finance to meet pre-operative expenses
towards entry into capital markets to raise funds by growth firms.
8.4 At one point of time State Financial Corporations (SFCs), as development finance
institutions, were playing a very important role in meeting credit needs of the
entrepreneurs investing within the state. Most of the SFCs, however, did not succeed
due to a variety of reasons, including political interference. They were vanguards of
the local entrepreneurial aspirations and manifestations, unlike scheduled
commercial banks that go for deposits in one state and extend credit facilities in
some other states, leading to lopsided credit: deposit ratio.
8.5 It is true that capital is scarce in our country but the existing institutional framework
for capital supply lacks a streamlined structure and strategy, multiplying to the
problems of capital accessibility. The entrepreneurs, particularly micro and small,
meet their capital requirements primarily from their personal savings and to some
extent from bank credit. However, it is a sheer myth that capital shortage, particularly
for MSMEs, can be financed through credit instruments only.
27

8.6 The society at large can also be encouraged to directly invest in MSMEs by
promoting, strengthening and developing capital markets for MSMEs. The approach
of local capital for local enterprises can on one hand reduce the transaction costs of
financial intermediation while, on the other, it would help generate equity investment
culture among the saving segments of the society, which is indeed needed to build a
healthy environment for enterprise development. And, if capital is easily accessible,
a huge hurdle to start and grow an enterprise will be overcome.
8.7 Scheduled commercial banks and other financial institutions also shy away from
funding new enterprises due to the lack of their track record in terms of credit rating.
Very few SMEs get credit ratings because of their ignorance about Credit Rating
Agencies and advantages of such rating.
8.8 There is widespread disdain and an utter lack of tolerance for business failures in
India. Government is aware of the stigma that business failure carries. Even if an
entrepreneur fails due to market failures or some other genuine reasons, he/she
becomes almost a castaway for financial institutions, unlike in the US or other
developed economies where failures are treated as learning and the failed
entrepreneur can restart a new venture without any stigma. A persons perception of
cost of business failure could act as a major deterrent to entrepreneurship.
8.9 The Government is determined to address issues related to credit delivery and
further reinforce the flow of credit to a deserving entrepreneur with a viable project. A
young potential entrepreneur cannot be allowed to get frustrated and move out with
broken dream, while s/he may have the potential to bring about a positive change in
the markets. Government believes that if capital is found to be easily accessible, a
huge hurdle to start and grow an enterprise will be overcome. Therefore, the
Government will:
(i) ensure that the credit delivery norms are met by financial institutions without
compromising with the quality of the projects submitted for credit.
(ii) strengthen venture capital companies in quasi-public sector such as Gujarat
Venture Finance Ltd. or Andhra Pradesh Industrial Development Corporation,
by infusing capital through equity participation; and also encourage other state
governments to promote similar venture capital organisations, with
participation of the centre and state governments, financial institutions and
private investors. These funds will be directed towards financing start-ups and
early growth companies. To this effect, the Government will establish an Early
Stage Venture Fund through a PPP mode, to participate in innovative start-up
companies, so that an enterprise may acquire enough credibility to approach
commercial venture funds to meet additional capital requirement. Though the
government has already set up a risk/venture capital subsidiary in Small
Industries Development Bank of India (SIDBI), it falls short of the requirement.
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(iii) induce society at large to directly invest in MSMEs, by promoting,
strengthening and developing capital markets for micro, small and medium
enterprises. While the approach of local capital for local enterprises will
reduce the transaction costs of financial intermediation, it would help generate
equity investment culture among the people. This is indeed needed to build a
healthy environment for entrepreneurship development.
(iv) promote state level or regional capital markets for MSMEs. Such exchanges
will be in PPP mode, where state owned and national level financial
institutions will initially have controlling interest.
(v) promote a rescue culture by revisiting bankruptcy rules; and facilitating
counselling and advisory service to troubled firms.
(vi) revive State Financial Corporations (SFCs), by making necessary changes in
the SFC Act. The SFCs will be mandated to look after the credit requirements
of the MSMEs at the state level and will be operationally independent and
professional. A provision will be introduced to convert these corporations into
companies with up to 49 per cent public participation in their capital.
(vii) involve national and state bodies set up to uplift disadvantaged and
marginalised groups of population e.g., National Scheduled Cast Finance
and Development Corporation (NSCFDC), National Minorities Development
and Finance Corporation (NMDFC), National Backward Classes Finance and
Development Corporation (NBCFDC), National SC & ST Finance and
Development Corporation, National Safaikarmacharis Finance and
Development Corporation (NSFDC), National Handicapped Finance and
Development Corporation (NHFDC), Rashtriya Mahila Kosh (RMK), State
Women Economic Development Corporations (WEDCs) -, in providing credit
to micro enterprise start-ups launched by their target population.
(viii) explore the possibility of setting up a national fund for the unorganised sector,
as recommended by the National Commission for Enterprise in the
Unorganised Sector in 2007, to hasten the process of achieving inclusive
growth of entrepreneurship.
(x) give more effective recovery powers to financial institutions by introducing an
appropriate legislative change.
(xi) create wide awareness among SMEs about credit agencies like SME Rating
Agency (SMERA) and educate them about the advantages of credit rating.
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9.0 RECOGNISING AND CELEBRATING ENTREPRENEURSHIP TO PROMOTE
ENTREPRENEURIAL CULTURE
9.1 To an extent, the supply of entrepreneurs is also determined by the prestige and
image that entrepreneurship commands in a society. If entrepreneurship is
respected, it gives impetus for the youth to consider entrepreneurship as a preferred
career. If it does not have high esteem, it may deter youth from getting attracted to
this career. In India, entrepreneurship has somehow, not been able to acquire the
status it deserves, unlike developed economies such as the USA, the UK, Japan and
Singapore. Even the government policies did not encourage entrepreneurship until
recently. In fact, India, as a society, appears to have had disdain for making money
and contempt for entrepreneurship. Not many persons realise the contribution that
entrepreneurship makes to growth and development of a country.
9.2 Of late, the situation has started changing, particularly after the early 1990s, with the
advent of liberalisation, privatisation and globalisation. The new economy and
knowledge driven sectors like IT, ITES, Nano Technology, and Bio-Technology, are
new manifestations to entrepreneurship. New economy entrepreneurs are mentioned
with reverence. Nevertheless, there is a need to create more role models at district,
state and national levels to encourage and attract entrepreneurial talent. Towards
this objective, the Government will:
(i) create district, state and national level Entrepreneurship Ambassadors from
amongst successful entrepreneurs to recognize their success and
achievements.
(ii) facilitate setting up of Young Entrepreneurs Consortium (of entrepreneurs
below 30 years of age) at all levels (district, state and national levels) with the
mandate to seek their support in promoting entrepreneurship in their areas by
delivering motivational lectures and organising various events around the
theme of entrepreneurship and development work (a la Teach for India and
Yuva Unstoppable), by involving youth.
(iii) introduce a Give An Entrepreneurial Hour scheme to encourage established
entrepreneurs to commit 1-hour a month for promotion of entrepreneurship by
addressing students of schools, colleges and other groups of youth, in
addition to providing hand-holding support to start ups, at local level.
(iv) introduce Young Achievers Awards (for both men and women entrepreneurs
separately) at all levels viz., district, state and national levels to recognise the
achievements of entrepreneurs below the age of 30 years. These awards will
be coordinated by District Industries Centres at the district level,
Commissionerate/Directorate of Industries at the state level and Ministry of
MSME at the national level.
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(v) encourage media to cover and publicise entrepreneurship related events,
including the Award Functions and host shows projecting achievements of
young entrepreneurs at all levels.
(vi) involve leading industry and business associations like Federation of Indian
Chamber of Commerce and Industry (FICCI), Confederation of Indian Industry
(CII), the Associated Chambers of Commerce & Industry of India
(ASSOCHAM), state level Chambers of Commerce and Industries, sector
specific industry associations like NASSCOM, in accomplishing the tasks
stated above.



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10.0 CREATION OF A PERMANENT NATIONAL COMMISSION ON
ENTREPRENEURSHIP TO INSTITUTIONALISE ENTREPRENEURSHIP
DEVELOPMENT IN THE COUNTRY
10.1 A large number of ministries in the Government, viz. Ministries of MSME, Finance,
Commerce and Industries, Company Affairs, Law and Justice, Women and Child
Development, Human Resource Development, Rural Development, Department of
Science & Technology, Food Processing Industries, Housing and Urban Poverty
Alleviation and Social Justice and Empowerment are engaged, directly or indirectly,
in the promotion of entrepreneurship. Since development of entrepreneurship is
affected by policies and actions of different ministries at the central and state levels,
the implementation of entrepreneurship policy necessitates inter-ministerial and
inter-governmental coordination. Also the task of developing broad-based
partnerships with community organisations, members of media, and business and
corporate sector goes much beyond the purview of any single ministry.
10.2 In view of the above scenario, the Government of India will set up a permanent
National Commission on Entrepreneurship (on the lines of Prime Ministers National
Skill Development Council), with Prime Minister as Chairperson and Union Ministers
of the relevant ministries, Deputy Chairman, Planning Commission, captains of
industry, young entrepreneurs (with at least 10% representation), academia and
specialized institutions engaged in promoting entrepreneurship, R&D institutions,
angel investors/venture capitalists, etc., as members, to achieve convergence.
10.3 The proposed Commission will have a professional with considerable experience in
the field of entrepreneurship, as Deputy Chairperson and two permanent members
appointed for a term of five years. A senior secretary level officer from the
government will be Member Secretary of the Commission.
10.4 The proposed Commission will guide entrepreneurship movement in the country,
unleashing entrepreneurship and youth power in pursuit of wealth creation,
employment generation and productivity improvement, by judiciously harnessing
technology and resources. State Governments will also be encouraged to set up
similar organisations at the state levels, which may be headed by the Chief Minister.
10.5 As of now, only 13 states governments have set up state level entrepreneurship
development institutions (EDIs). The Commission will assist the remaining state
governments also to set up state EDIs, to strengthen training infrastructure for
entrepreneurship.
10.6 The Government will make adequate financial provisions, on the lines of National
Skill Development Corporation, to foster entrepreneurship development movement in
the country.
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10.7 The Commission will be mandated to:
(i) develop a vision document on entrepreneurship;
(ii) help state governments evolve their entrepreneurship policy in consonance with
the national policy, to create an environment for germination and growth of
entrepreneurship, and thus motivate youth to take up entrepreneurship as a
preferred, viable and rewarding career;
(iii) evolve a five year plan and strategies for promotion of entrepreneurship;
(iv) work out methodologies for implementing policies, strategies and plans by
coordinating with relevant departments and ministries;
(v) constantly monitor the changing global and national economic environment
and its impact on entrepreneurship, and introduce policy shifts accordingly;
(vi) revamp and/or create institutional framework for promotion of entrepreneurship;
(vii) carry out/sponsor research and document, monitor and evaluate the outcome
of the interventions.

10.8 What will be achieved?

(i) Operation of the Commission will lead to creation of an enabling
entrepreneurial environment that will attract/induce investments, create
employment opportunities, and generate wealth at an incremental and
sustainable rate.
(ii) It would augment and create a dependable stock of socially responsible
entrepreneurs who understand the present day market and seek challenges.
(iii) It will facilitate capacity building of entrepreneurs rather than enterprises
alone. It will culminate into an institution that is entrepreneur-oriented and
plays the role of a catalyst for promotion of entrepreneurs. The Commission
will support the government in formulating entrepreneur-friendly policies
encompassing start up, survival, growth and recovery phases of enterprises,
within the overall framework of Entrepreneurship Policy.